Reform full-fledged childcare programs running on debts

The Seoul Metropolitan Government plans to issue 200 billion won (182 million U.S. dollars) of bonds to raise funds to continue childcare services for children aged five or under. The municipal government decided to borrow money as it is unable to pay for childcare after running out of relevant budget. It is worrisome how the city, which already has nearly 3 trillion won (2.7 billion dollars) in debt, will repay the new borrowings. Even if the city pays for childcare with money from the new bond issuance, how will it fund the program from next year? Seoul cannot continue the welfare program with borrowed money every year. Other local governments have secured childcare budgets by allocating supplementary budgets. But they cannot pay for welfare programs with supplementary budgets every year.

It is wrong for the political circles and the central government to expand childcare services from those aged 70 or lower percentiles of income to all classes without figuring out how to raise the funds and pass the burdens on to local governments. Last year, too, local governments struggled to find childcare budgets, complaining that they were forced to give up all other major projects. Then, the ruling and opposition parties drew up a bill for the revision of the childcare law to increase state subsidies to local governments. However, they have yet to pass the bill due to the finance ministry`s opposition.

This year, childcare services have been expanded to all households with children after the ruling and opposition parties agreed to increase the relevant budget by 1.4 trillion won (1.3 billion dollars) near the end of last year after the presidential election. However, the central government saw its tax revenue shrinking amid an economic slump. As a series of other welfare projects proposed by President Park Geun-hye await implementation next year, it is questionable whether the central government can secure the funds for subsidies to local governments.

We cannot help but wonder whether the current all-inclusive childcare is sustainable. The Korea Development Institute, a state-run think tank, said in a recent report that the childcare program failed to increase women`s employment rate. The government`s childcare budget increased 2.6 times over the last four years to 12.3 trillion won (11.3 billion dollars) this year. Still, the welfare program failed to increase childbirths or women`s employment. A full-fledged childcare, which neither the central government nor local governments can maintain, should be reviewed next year.